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Taking Jacinda Seriously New Political Dynamics Parties Poles Apart on Climate Change Policy Multi-National Tax Law Changes Lots

HUGO Assessing the economic and political environmentvision in Confidential to August 4 2017 HUGO members

Taking Jacinda seriously Page 2 No one yet knows how powerful the ignition of hope and momentum created by replacing Andrew Little with will be. But no one is taking it for granted. Senior National Party members and ministers are saying “give it a week’ rather than “forget about it”.

New political dynamics Pp 2&3 Labour ‘s leadership change is achieving what achieved for the Greens a fortnight ago with her ‘benefit bomb’ disclosure – creating almost exclusive political media focus. In the next few days, Ardern’s performance is crucial as she relaunches a tweaked campaign slogan and presents major new policy on transport.

Parties poles apart on climate change policy Page 6 National announced substantive elements of its climate change policy, including an intention to auction NZ carbon units and to limit NZ emitters’ access to international carbon markets to meet the country’s Paris agreement commitments. But National is cold on putting commitments into law, while Labour, the Greens and NZ First back creation of a Climate Change Commission.

Multi-national tax law changes Page 4 With the OECD moving in synch to close down commonly exploited cross-border tax avoidance ploys, the govt is upping its estimate from $100m to $200m in additional tax revenue annually as it announces tax law changes to attack practices that , in some cases, the NZ courts had already begun striking down.

Lots of independent possibilities Page 3 This election is unusual for the number of potential one-MP parties that could be represented in the next Parliament. , Te Uruora Flavell, David Seymour and are all in the mix, but perhaps most intriguing is City councillor and former merchant banker Raf Manji’s bid to unseat in Ilam.

Wheeler’s last stand Page 6 Next week’s Monetary Policy Statement will be the last in RBNZ governor Graeme Wheeler’s sometimes unhappy five year tenure. Job numbers this week gave equivocal signals – job growth and participation rates were down, but so was unemployment, while full time work and wages are robust. There is little argument for either a tightening or an easing bias at present.

Auditor-General resigns Page 6 The suppression by a parliamentary select committee into its report on the outgoing Auditor- General Martin Matthews’s performance over a $750,000 fraud when he was ceo at the Ministry of Transport is at odds with the transparency essential for a country whose incorruptibility is one of its global sources of differentiated competitiveness.

Text finalised August 4 Contact: [email protected]. No responsibility is accepted for acts or omissions by clients as a result of items herein. © The Hugo Group 2017 HUGOvision August 4 2017

POLITICS AND POLICY

A campaign transformed of Labour’s problem in recent weeks. Had the Ardern story not happened this week, ’s As David Farrar noted in last month’s Hugo Group apparently popular Monday announcement the breakfast briefings: “Campaigns matter.” Trump govt is dropping the primary school decile funding and Corbyn are the go-to current examples, and the system might have set the political tone for the question is now whether replacing Andrew Little week after a quiet couple of weeks from National with Jacinda Ardern has transformed Labour’s hopes while Metiria Turei dominated headlines. of leading the next govt. Worth noting as a harbinger of a more unsettled Tuesday’s note, immediately after her elevation, electorate is the sharply deteriorating trend in suggested success for Ardern was as simple as doing UMR’s ‘right track/wrong track’ measure for NZ, better than 25%. The injection of hope into both long regarded as a bellwether for electoral success. Labour and centre-left voters that the appointment Last December, the reading was 65 right-track to 24 of a telegenic 37 year-old who could become NZ’s wrong-track. That had fallen to 57-33 in June and 53- or has created 35 by late July. is extraordinary. More than $300k in small member donations have flowed to the party since Tuesday. Jonathan Coleman’s grasp on the health portfolio is also looking distinctly untidy, with widespread Labour’s presence suggests the old acceptance that mental health services are creaking campaign slogan – “a fresh approach”– may be and that the Dunedin public hospital service is replaced with “let’s do this” – a call to action that failing. would capitalise on the sudden sense of momentum the risky late leadership change has created. How the parties are tracking The big question that remains is this: will Ardern’s As they head into the campaign proper, our elevation grow the centre-left vote or just the Labour assessment of the parties’ relative momentum is: vote. Both the TV network polls published before Andrew Little stepped down showed Labour losing • National had been out of the news during Metiria- ground either to the Greens (TVNZ Colmar-Brunton) gate and appeared to have shaken off the Todd or NZ First ( Reid Research). Unless she can Barclay affair before the Labour leadership change. reach across the political aisle, National’s position At 47% in the latest Colmar-Brunton poll, taken at 45%-plus will still leave it in the best position to while the Greens effectively robbed Labour of form a govt. In effect, National now faces a Labour around 4% support, National should well-placed to Party looking as competitive as it would have been form the next govt. English used to live by a theory reasonable to expect under any Labour leader. The that National was always advantaged “every time main challenge now for National now is that Ardern people see Metiria Turei on TV”. His own shaky will easily outshine him on electronic media and as record as a campaigner matters more now that the the face of a new generation of political leadership. unengaging Little is replaced by Jacinda Ardern, assuming she campaigns well; Crucially, the media are now talking about Labour instead of everybody else, which was a big part • Until mid-morning Tuesday, Labour was in terrible trouble, looking at The campaign can matter – UK 2017 its own version of National’s 2002 election nadir, when it polled 22%. Redemption beckons under a new leader and more importantly, Ardern’s elevation delivers a powerful dose of hope to NZers who want to change the govt but couldn’t see how it would be done. A noted, drawing votes back from the Greens and NZ First won’t be enough; 2 HUGOvision August 4 2017

POLITICS AND POLICY

• The Greens drowned out ’s Party’s Hone Harawira. There has been some election year conference with Turei’s simultaneous inspired political thinking by party president Tuku disclosure about historical benefit fraud. This has Morgan, but sound execution has proved difficult. clearly stuck a chord with Labour voters, but might Thoughts last year of a clean sweep in the Maori it be putting off a group that National is worried seats are a distant memory; about – urban National supporters who don’t like • ACT’s David Seymour has done a good job as a dirty rivers and the dairy industry are tempted by lone MP re-establishing ACT as a party of political the Greens? National’s campaign, once launched, is principle and Epsom will vote as directed, but likely to target this group; ACT feels tired and may lose support to TOP, • NZ First may have peaked. Winston Peters has as evidenced by TOP’s threat to stand Gareth campaigned to ‘save the regions’ at a time of Morgan in the electorate (now changed to TOP booming activity in many regional economies. campaigning in Epsom for the party vote); His conference performance was tired and his • United Future’s Peter Dunne has a hold on the traditional iron discipline over party doctrine is Ohariu electorate that shows no sign of loosening, slipping as and mark out especially given the invisibility of Labour’s territory to be his successor. But he’s still the best candidate, former police union spokesman Greg chance either National or Labour-Greens will have O’Connor; to form a govt. The Greens dare to hope they’ll be a much larger party than NZ First in the next • Raf Manji, independent for Ilam. Manji’s Parliament, limiting Peters’s capacity to dictate terms; campaign announcement flew under the radar with national news media, but he is said to be • : according to both this making inroads with the blue-blooded voters of week’s public polls, TOP made 2%, ahead of Ilam. If anyone has a chance of toppling Gerry support expressed for any of the three govt support Brownlee, who’s held the Christchurch suburb parties: Maori, Act, United Future. Its campaign since 1996 and had a majority of 11,898 in 2014, has appeared to be building, Gareth Morgan is it’s the former merchant banker who is highly getting large crowds in regional centres, stirring regarded for his stewardship policy debate that is resonating across the political of Chch City Council’s finance spectrum, and Morgan is able to underwrite a committee through the rebuild CEO Retreat healthy campaign budget. The party seriously so far. Manji wants to be Minister There are still a couple of hopes it can make 5% on election day, its metric of Chch Regeneration in the next places left for this year’s CEO Retreat, Aug 24-26. being whether it can push to 3% in pre-election govt, irrespective of its stripe, on polls. At that point, they will dare to hope the the basis that he’s done all he can If you haven’t already registered for this stimulating other 2% is going to come their way. With six seats, as a Christchurch city councillor TOP becomes a replacement for NZ First in govt weekend, where partners and now needs to wield influence are welcome to attend and formation talks with National. However, in lining at a national level. He is concerned participate, there are still up as a clear partner for National, TOP would lose the city’s rebuild has stalled, limited opportunities to do. some existing support from Labour or Green voters vision lost, and that there’s a risk Contact Tracey Gabbitas attracted to TOP’s brand of radical rationalism. the strategic importance of re- on tracey.gabbitas@ The switch to Ardern heightens this possibility establishing a strong city of Chch thehugogroup.com or on 027 44438434 for further and would seem to make TOP’s already tough job could be lost too. His proposal of a information. tougher. That said, as the dust settles on the Labour 2026 Commonwealth Games bid leadership change, expect to see TOP campaigning becomes a focus for achieving heavily on being the best alternative to NZ First that. Manji has no interest in the Chch mayoralty, being part of the next govt; has worked well with Lianne Dalziel, and will be • Maori Party: it all depends on Te Ururora Flavell encouraging voters to give their party vote to TOP. holding Waiariki and the Greens won’t help Labour to make it happen. While the party can encourage Ardern’s first policy outing – Maori roll voters in seats other than Waiariki to Auckland transport give their electorate vote to Labour and party vote to Maori, that logic doesn’t work for retaining Ardern’s first major set-piece policy announcement Flavell’s seat. Kelvin Davis’s appearance as deputy will be on Sunday. It will be interesting to see leader should help Labour’s Maori vote, although whether the policy, postponed by the leadership the fact he is resuming his place on the party list change from Thursday, gets more attention than it raises the question as to whether he has concerns would have under Andrew Little’s leadership. about holding against the Mana Continued p6 3 HUGOvision August 4 2017

GLOBAL AFFAIRS

Trump’s next gamble: tax reform already. by September NATO is preparing to deploy additional troops to eastern European locations ahead of Russia’s plans to Having been out-manouevred by John McCain on hold its largest military exercises since the Cold War repealing ‘Obamacare’, the Trump presidency is near the borders with the Baltic former Soviet states moving on to tax reform. Politico reports that White of Lithuania, Estonia, and Latvia. The preparations House legislative director Marc Short last week laid are eliciting new expressions of support for NATO out a “super-ambitious timetable for tax reform from US Secretary of State Rex Tillerson, in contrast at a Koch Brothers network event”. The plan is to to President ’s previously stated have a bill introduced in early Sept on a two-month scepticism about the trans-Atlantic military alliance. timetable, passing through te House in Oct and the Senate in Nov. In the absence of any further action on Pakistan has a new PM, Shahid Khaqan Abbasi, a healthcare reform, which Republicans will not touch, staunch ally of Nawaz Sharif, who was removed the timetable is theoretically doable. from office by the Supreme Court on Aug 25. Deeply politically connected by birth and marriage to the The hurdle for Trump this time will be that Budget Pakistani elite, Abbasi spent time in prison for and debt ceiling legislation – the hardy perennials of refusing to testify against Sharif after his earlier US congressional gridlock – are looming in Sept and overthrow by coup in 1996 by Gen Pervez Musharraf. Oct. Foreign Policy reports that Kazakhstan, the most Belt and road gets auditors stable of the ‘stans, has discovered deeply rooted ISIS activity within its border. Chinese financial regulators are imposing new reporting and audit requirements on SOEs Global growth outlook contemplating foreign investment. At a time when The IMF lowered its growth forecasts for the UK and Beijing is promoting its global ‘belt and road’ strategy the US in its July World Economic Outlook update to build infrastructure connecting globally, report. In its first downgrade of Britain’s economy the new measures appear designed to attempt some since the country voted to leave the EU in June 2016, degree of risk management. it expects the growth of 1.7% this year, down from Flashpoints a 2% forecast in April. It continues to project global output growing by 3.5% this year and 3.6% in 2018, North Korea’s latest ICBM test demonstrates the although the composition of that growth has swung Hermit Kingdom is now capable of targeting west more to Europe and Asia. US fiscal stimulus is now coast US mainland targets, a major development. expected to be less than previously anticipated while Among theories as to why North Korea continues to Japan and the Eurozone had shown unexpected pursue such a bellicose stance centre on an attempt momentum. China’s growth projections were revised to follow the strategy China followed in the 1960s, up on Q1 strength and expectations of continued where it parlayed its new-found nuclear capability fiscal support. into forcing the rest of the world to create openings for it in the international order. North Korea’s RCEP delayed again main problem with that strategy may be that it is The Regional Comprehensive Economic Partnership far smaller than China and that its dependence trade negotiations have extended to 1H 2018. on patronage from Beijing is somewhat stretched

The world at a glance China Japan Europe PMIs suggest Canada Germany Economic BOJ’s “underlying” inflation Upside surprises acceptable growth Jump in GDP confidence hits stuck near zero on growth and growth illusory United States decade high inflation Middle East Political turmoil Oil rally continues intensifies Australia New Zealand Greece Iron ore prices Election campaign Issues first sovereign appreciate heats up bond since 2014

4 HUGOvision August 4 2017

DOMESTIC ECONOMY

‘Noisy’ jobs data a strong 1.5% in Q2 for a 5.1% annual increase, well ahead of CPI inflation at 1.7%, suggesting a June quarter labour market statistics surprised on hint of wage acceleration. That, in turn, should the downside with a drop in the participation rate, underpin household spending as will after-tax which remains very high at 70% and slower than income increases after April 1 tax changes next year, anticipated job creation, the net effect of which was assuming no change of govt. still a drop in the unemployment rate to the expected 4.8% rate. Monetary policy implications However, financial markets reacted to the figures as a Given that the CPI has already undershot sign of unexpected economic weakness, sending the expectations and the NZD continues to run NZ dollar lower. significantly higher than RBNZ projections, the Our read is that there is too much noise in the chances of an OCR hike by mid-2018 are further numbers to call it a trend at this stage, especially diminishing. Next week’s MPS will be principally as the official figures run counter to a host of other about CPI inflation forecasts. more positive employment indicators during the Given all that has occurred since the May MPS, we period. The Quarterly Employment Survey, for see broad downward pressure coming on the Reserve example, showed the number of full-time equivalent Bank’s inflation forecasts. Note, for example, the employees rose 0.7% in the second quarter and a 1.0% central bank’s admission its ‘neutral interest rate’ increase in filled jobs. While there are conceptual assumption has moved from above to below 4%. differences between the two surveys, this result aligns better with very strong employment intentions Even so, we suspect the Bank will do its best to try and high and rising job ads and firm consumer to maintain a neutral stance on the OCR and don’t confidence. A bounce back in the official employment expect rate cut signalling, especially as the economy figures may be ahead but these are the numbers is currently sufficiently capacity constrained and political parties will take into the election campaign growing well enough that it needs no extra stimulus and allow a ‘weakening job market’ narrative for from the central bank. Opposition parties. Nonetheless, unemployment rate is at its lowest level since 2008. Uneven inflation impacts On wages, the 0.4% increase for the quarter in Beneficiaries were the hardest hit by inflation in the the private-sector Labour Cost Index was in line second quarter of the year due to higher prices for with expectations and gives annual wage inflation housing, household utilities and food, while overall of 1.6%. QES total gross weekly earnings rose prices continued to dip for top earners, Stats NZ said.

Trading partner growth (2015-16 actual; 2017 Consensus Forecasts; 2018-19 figures Hugo estimates)

Trading partners GDP Growth (ann avg %) CPI Inflation (ann avg %) Weights % 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 China 23.7 6.9 6.7 6.6 6.3 5.8 1.4 2.0 1.8 2.1 2.4 Australia 20.8 2.4 2.5 2.1 2.8 2.6 1.5 1.3 2.2 2.3 2.4 United States 13.4 2.6 1.6 2.2 2.3 2.1 0.1 1.3 2.1 2.1 2.3 Japan 7.5 1.2 1.0 1.4 1.1 0.9 0.8 -0.1 0.5 0.8 1.2 Eurozone 7.3 1.9 1.7 1.9 1.7 1.4 0.0 0.2 1.5 1.4 1.7 South Korea 3.8 2.8 2.8 2.8 2.6 2.3 0.7 1.0 1.9 1.8 2.1 United Kingdom 3.7 2.2 1.8 1.6 1.4 1.5 0.0 0.7 2.7 2.7 2.3 Singapore 2.8 1.9 2.0 2.5 2.3 2.3 -0.5 -0.5 0.9 1.3 2.0 Taiwan 2.7 0.7 1.5 2.2 2.0 1.7 -0.3 1.4 1.0 1.4 1.2 Indonesia 2.2 4.9 5.0 5.2 5.4 5.1 6.4 3.5 4.2 4.1 4.6 Thailand 2.1 2.9 3.2 3.4 3.4 2.9 -0.9 0.2 0.8 1.6 1.8 Hong Kong 2.0 2.4 2.0 2.7 2.3 2.3 3.0 2.4 1.8 2.3 2.3 Malaysia 2.0 5.0 4.2 5.0 4.7 4.3 2.1 2.1 3.8 2.5 2.5 Philippines 1.6 6.1 6.9 6.4 6.4 5.9 1.4 1.8 3.2 3.3 3.1 India 1.6 7.9 7.1 7.3 7.6 7.4 4.9 4.5 3.8 4.6 5.1 Canada 1.5 0.9 1.5 2.7 1.9 1.9 1.1 1.4 1.7 1.9 1.9 Vietnam 1.3 6.7 6.2 6.3 6.3 6.3 0.9 2.7 3.8 4.5 4.5 NZ Trading Partners 100 3.6 3.4 3.5 3.5 3.2 1.1 1.3 1.9 2.1 2.3

Forecasts for New Zealand Consensus 2.5 3.1 2.6 3.1 2.8 0.3 0.6 1.9 1.8 2.0 BNZ Forecasts 2.5 3.1 2.5 3.0 2.6 0.3 0.6 1.8 1.7 1.9

The World 3.0 2.5 3.0 3.0 2.7 1.9 2.5 3.0 2.8 3.1 5 HUGOvision August 4 2017

POLITICS AND POLICY

Continued from p3 (BEPS) are now expected to raise double the revenue forecast in the May Budget, with the govt now Labour’s fiscal plan and other major announcements targeting $200m a year in additional revenue from have sunk without trace in recent weeks. a range of measures aimed at choking off routinely The Auckland transport plan will lay out a detailed exploited opportunities to arbitrage tax regimes and large-scale public transport infrastructure through tax-optimised debt and equity allocation programme that would be underpinned by a Labour- across borders. led govt committing to Auckland growing mostly Key changes are: south of the isthmus. The thinking reflects Labour’s Auckland Issues spokesman ’s regard • foreign parents will not be able to charge NZ for the views of Infrastructure NZ ceo Stephen subsidiaries high interest rates to reduce taxable Sellwood. profits in NZ; The policy is expected to commit to at least a • MNCs will no longer be able to use ‘artificial third, perhaps even a fourth rail ‘main line’ in the arrangements’ to avoid a taxable presence in NZ; chokepoint between Weymouth and Wiri. That will • MNCs to be taxed ‘in accordance with the open up major opportunities for rail-based public economic substance of their activities in NZ; transport from Britomart to Pukekohe and the potential for a spur-line service to the airport. • counter strategies allowing MNCs to exploit gaps and mismatches in different countries’ domestic tax The Wiri rail upgrade is a ripe political opportunity rules to avoid paying tax anywhere in the world; as Transport Minister has been successfully painted as opposing KiwiRail’s bid to • improve IRD’s ability to investigate ‘uncooperative’ fund the project, the business case for which was MNCs. released under the OIA, but only after his office attempted to block its release. Wanted: a new Auditor-General The southern residential intensification would likely Martin Matthews took an arguably belated decision lend itself to Labour’s KiwiBuild mass affordable to resign as Auditor-General just before the release of housing plans too. Do not underestimate the a parliamentary select committee report that found potential for Labour’s coherent, costed plans to serious fault with his handling of a whistleblowing emerge more under a more charismatic leader. and fraud scandal at the Ministry of Transport, where he as CEO at the time. Daylight between parties on The resignation smacks of a deal to keep detail Climate Commission of the Matthews investigation out of the public eye. The Offices of Parliament select committee has There is clear daylight between the National resolved not to release its report into Matthews’s and Opposition parties on the Parliamentary performance after Matthews resigned just ahead Commissioner for the Environment’s recommendation that an independent Climate of the committee tabling a redacted report recommending his resignation. He stood down from Change Commission be established. It would have his role in May while the investigation occurred. legislated powers to set a national carbon budget and place in law the country’s commitments to reduce Matthews issued a statement apologising for the greenhouse gas emissions following the Paris climate $0.75m fraud that took place on his watch and said accord. National thinks “interesting”, but not yet. he should have been more suspicious of his senior Labour, the Greens and NZ First support its creation. manager, Joanne Harrison, now serving a prison sentence for her offending. While his statement said The commission would be based on a UK model he was “as angry and aggrieved as anyone about her that has found favour with a cross-parliamentary stealing and breaches of trust”, it did not mention the group of MPs, including several from National, four staff who received apologies and payouts from led by former diplomat and Greens climate change the SSC for the damage that occurred to their careers spokesman Kennedy Graham. as a result of being ignored. The issue looks likely to gain political focus, The unusual decision not to release a report into the irrespective of the outcome, when the Environmental conduct of a public servant at the heart of institution Defence Society hosts a conference on intended to promote and preserve public trust in the financial probity of publicly managed funds is MNC tax decisions troubling. 6 Decisions on tax base erosion and profit-sharing HUGOvision August 4 2017

CORPORATE ROUND-UP

Capital markets from allowing the country’s 2nd and 3rd largest general insurers to merge. TSB Bank has announced its intention to buy the 51% of managed funds operator Fisher Funds The Reserve Bank aims to improve the effectiveness that it doesn’t already own and is bringing US of its prudential regulation by simplifying its private equity firm TA Associates on as a minority regulations and shoring up its supervisory activities, shareholder. deputy governor Grant Spencer said in a speech. “We must maintain the high international reputation International Financial Corp, a member of the World of the NZ financial system. Within that we seek Bank Group, has launched a minimum $100m Green to maintain and build on the bank’s non-intrusive Kauri bond sale to finance private sector investments supervisory approach and simple-yet-conservative addressing climate change in emerging markets. It is prudential requirements,” he said. the first “green bond” launched in NZ. Partners Life, whose shareholders include US private Moa Group has raised about $329,000 from a US equity firm Blackstone, posted a 13% drop in annual investor who paid a 6.8% premium for a small profit to $9.7m, which it said was the result of low shareholding. The brewer also announced the exit of interest rates pushing up the life insurer’s theoretical founding director, winemaker Allan Scott. long-term liability. Customer numbers rose 15% Punakaiki Fund, the long-term investor in high- to 145,000, while in-force annual premiums were growth local firms set up by Lance Wiggs, wants to up 20% to $207m. Underlying earnings were little go public in the middle of 2019 with at least $100m of changed at $12.5m from $12.6m. assets. Peer-to-peer lending platform Harmoney Corp more Powerhouse Ventures sought a trading halt of than halved its annual loss as revenue rose 63% in its its ASX-listed shares after NBR reported a mass second full year of operation, and has since passed resignation of directors at investee firm Hydroworks. $500m lent through the portal. The loss was $6.5m in NZX cash trading fell in the first half, with fewer the year, down from a loss of $14.2m a year earlier. IPOs but more funds under management. Total Revenue rose to $14m from $8.6m. trades in the six months to June 30 were flat at 923,078, while total value traded dropped 12.7% to Primary industries $19.8b, with daily average value traded dropping Fonterra and Westland Milk Products have lifted 12.7 percent to $161m. The NZX50 Index was at 7,611 their milk payout forecasts. Westland expects to pay as of June 30, up 10.3% on the year. between $6.40 and $6.80/kg of milk solids for the current season. Fonterra lifted its forecast farmgate Innovation payout for the 2018 season by 25c to $6.75/kg of Flight Plastics, which makes plastic packaging, has milk solid and earnings per share unchanged at 45 opened the first plant in Australasia able to recycle to 55c, making the forecast total available payout to local polyethylene terephthalate (PET) drink bottles farmers in the 2017/2018 season $7.20 to $7.30, before into food-grade packaging. retentions. Fonterra also lifted the amount it will pay its Aust suppliers on the back of an improvement in Blis Technologies expects to post a maiden profit in its business across the Tasman and rising milk prices. the current financial year and says it is positioned for Fonterra Australia lifted its average milk price for the sustainable, profitable growth in a rapidly expanding 2017/18 dairy season by A20c to A$5.50/kg of milk market. solids. The increase will apply from July 1 and will be Corporate earnings paid on Aug. 15. Fonterra penalised South Canterbury farmers who Datacom lifted annual profit 61% to $44m as new had been supplying a failed dairy company it took services boosted sales and earnings, allowing a over to avoid bad optics with its existing suppliers bigger dividend of $3.10/share. Revenue rose 9.8% to and to show there would be consequences for $1.16b, and gross profit of $701.5m was at a margin of leaving, the farmers’ lawyer has told the Supreme 60.6%, up from 59.8% in 2016. Of that revenue, 5.2%, Court in the appeal over lower-paid “growth or $59.7m, was from its biggest customer, compared contracts” for suppliers of a failed dairy venture. to 8.5%, or $90m a year earlier. Blue Sky Meats posted an annual loss of $1.91m, Banking, finance and insurance its second in a row, and said the future of its The Commerce Commission has declined Suncorp- unprofitable beef plant in Gore is under review. owned Vero’s bid for NZ insurer Tower, citing the Revenue slid 17% to $97.9m. It won’t pay a dividend. loss of competitive tension that it fears would result Silver Fern Farms ceo Dean Hamilton has resigned 7 HUGOvision August 4 2017

CORPORATE ROUND-UP

and will leave at the end of the year. The company options through the course of the next five years”. is seeking a replacement. Hamilton’s three years ASX-listed Travel Group will buy two as CEO saw him straddle the Shanghai Maling local travel firms for an undisclosed sum, expanding investment and partnership. its footprint in NZ. The Brisbane-based company Fonterra aims to expand its footprint in Africa agreed to buy Travel Managers Group (TMG) and as demand grows across the region, says Josh Executive Travel Group (ETG), making NZ the firm’s Hosking, sales director for Africa NZMP. With a fifth-biggest business globally, with some $1.5b in population of over 1.2b, “Africa is one of the fastest annual sales forecast in the 2018 financial year. growing markets of dairy imports and a significant Airwork Holdings, the aircraft services business opportunity, not just for Fonterra but for the NZ that’s 75%-owned by China’s Zhejiang Rifa Holding dairy industry,” he said. Group, has refinanced and agreed a new syndicated An outbreak of the cattle disease mycoplasma bovis debt facility of US$195mn replacing a US$135m near Oamaru appears to have been contained. Some facility. 25 animals have been destroyed but the condition carries no human health or food safety risks. Telecommunications Tesbrit BV has been granted Overseas Investment Courts and regulation Office approval to buy up to 49.9% of Two Degrees The govt’s second offer to owners of uninsured Mobile should the opportunity arise, valuing the property and bare land in Christchurch’s ‘red zone’ country’s third-biggest mobile operator at about was unlawful, the Court of Appeal has ruled in a $552m. The European company already owns 26.5% victory for the 16 Christchurch property owners of and, according to the OIO, says it doesn’t known as the Quake Outcasts. The decision sets control when and if it will buy more shares. aside former Earthquake Recovery Minister Gerry Brownlee’s second offer after the original was also Real estate and construction deemed to be unlawful in the Supreme Court. Property values rose at their slowest annual pace in Former Milford Asset Management portfolio more than two years as the Auckland housing market manager Mark Warminger has withdrawn his appeal flatlined after several years of rapid price gains. The against a $400,000 High Court judgment in the QV house price index rose 6.4% in the year through country’s first case of market manipulation. An FMA July, the slowest annual rate since Feb 2015 and cross-appeal will also be withdrawn. slowing from an annual increase of 8.1% in June. Values increased 1.6% to $641,280 in the three months MPI has laid charges against Southern Boundary ended July 31. In Auckland values rose 5.3% in the Wines Ltd former directors Andrew Moore and year, the smallest increase since May 2012. Scott Berry and winemaker Rebecca Cope, alleging breaches of the Wine Act and the Crimes Act. The Residential building consents fell 7% in June as allegations include mislabelling of wine from fewer new homes were consented although new vintages 2012 and 2013, and falsification of records. permits were still up an annual 4.7%. Some 2,560 new It is believed only a ‘tiny fraction’ of the national houses, apartments, townhouses, retirement village harvest in each of the two years is affected and there units and flats were consented in June. was no food safety issue. Retirement homes and healthcare Tourism, transport and logistics Demand at Ryman Healthcare’s existing villages was Auckland International Airport says it may need strong in the first quarter but growth in the first half balance sheet support toward the end of the 2018- will be limited, chairman David Kerr said. Oceania 2022 period as it implements a $1.9b infrastructure Healthcare said full-year profit and pro forma investment programme that includes a new runway underlying earnings exceeded forecasts thanks to a by 2028. The company said its balance sheet was lift in the valuation of assets. Net profit was $44.9m, robust but “given the size and nature of the capital ahead of the $25.3m forecast in its prospectus. plan, we will need to consider our capital funding

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